Amid Budget Debate, Some Members of Congress Own Bits of U.S. Debt

For some members of Congress, the debate over the debt ceiling has more than political implications. For those with investments in U.S. Treasury notes, bonds and bills, there’s a bit of a personal skin in the game too.

In 2010, at least 14 veteran members of Congress personally owned a portion of the U.S. debt, according to a Center for Responsive Politics review of congressional personal financial disclosure reports.

Some members of Congress hold as little as $1,000 in these types of assets, while others hold upwards of many millions. Disclosure reports only require members of Congress to list assets in broad ranges, and not specific dollar amounts.

Moreover, the number of lawmakers could be even higher, as the Center’s analysis was based on members of the 111th Congress who reported such holdings. These members’ most recently filed reports were then manually reviewed to discern whether they still held these investments.

Congressional personal financial disclosure reports covering 2010 were made publicly available in June. But these documents are not released in easy-to-read formats, so months of data entry and processing are required before a complete analysis of 2010 congressional holdings can be made.

Reports on current investments on T-bills or anything else will not be filed until next year.

Republicans and Democrats alike have these investments, according to the Center’s research.

Kerry’s most recent personal financial reports disclosed investments in U.S. treasury notes valued between $1,001 and $15,000, according to the Center’s review. Kerry’s wife also has holdings of at least $350,000 in U.S. Treasury bills.

The table below shows investments in U.S. Treasury bills, notes and bonds by current members of Congress who were also members of the 111th Congress. Data displayed is based on the Center’s analysis of their reports covering calendar year 2009:

Member of Congress

Investment

Minimum

Maximum

Sen. Frank R. Lautenberg (D-N.J.)

U.S. Treasury Bill

$4,467,011

$6,080,003

Rep. Judy Biggert (R-Ill.)

U.S. Treasury Bonds/Notes

$1,250,004

$850,000

Sen. Olympia J. Snowe (R-Maine)

U.S. Treasury Bills

$750,002

$1,500,000

Rep. Rodney Frelinghuysen (R-N.J.)

U.S. Treasury Note

$300,002

$600,000

Rep. Nita M. Lowey (D-N.Y.)

U.S. Treasury Bills

$100,001

$250,000

Sen. Claire McCaskill (D-Mo.)

U.S. Treasury Notes

$80,003

$200,000

Rep. Carolyn McCarthy (D-N.Y.)

U.S. Treasury Bond

$35,106

$35,106

Rep. Lamar Smith (R-Texas)

U.S. Treasury Note

$30,002

$100,000

Rep. Shelley Berkley (D-Nev.)

U.S. Treasury Note

$24,269

$24,269

Rep. Phil Roe (R-Tenn.)

U.S. Treasury Note

$19,872

$19,872

Sen. John Kerry (D-Mass.)

U.S. Treasury Bill/Note

$16,002

$66,000

Rep. Niki Tsongas (D-Mass.)

U.S. Treasury Note

$15,001

$50,000

Rep. John Boehner (R-Ohio)

U.S. Treasury Notes

$15,001

$50,000

Sen. Roger Wicker (R-Miss.)

U.S. Treasury Bond

$1,001

$15,000

Meanwhile, Sen. Frank Lautenberg (D-N.J.) held U.S. Treasury bills valued at a whopping $4 million to $6 million in 2009. Some of this amount is attributed to holdings of his wife, according to disclosure reports.

Lautenberg's personal financial report covering 2010 has not yet been filed with the Senate, as he was granted an extension earlier this year giving him until Aug. 15 to submit these disclosures.

On the Republican side, Speaker of the House John Boehner (R-Ohio), who has one of the largest political investments in the debt debate, also has investments in U.S. Treasury notes.

Boehner's investments in 2010 were valued between $15,001 and $50,000. Last year, he sold between $1,001 and $15,000 worth of Treasury bills.

A Republican with even more personal investments in such assets is Rep. Rep. Judy Biggert (R-Ill.).

Biggert had investments in U.S. Treasury notes and bills in 2010 that were worth at least $250,000 -- and maybe as much as $600,000.

"Throughout this process, Rep. Biggert's only concern has been for the financial security of her constituents," said Zachary Cikanek, spokesman for Biggert's office, in an email to OpenSecrets Blog.

Spokesmen in the congressional offices of Kerry, Lautenberg and Boehner did not respond to requests for comment for this story.

(Update, 8/2: "Senator Kerry voted to ensure seniors in Massachusetts received their Social Security checks on time, veterans still received their benefits, and to prevent a downgrade in America's credit rating and an economic meltdown that would have triggered a global economic catastrophe," Kerry spokeswoman Whitney Smith told OpenSecrets Blog. "His few thousand dollars in treasury bonds? Not a factor. Please.")

If the U.S. government does default on interest payments to people with holdings in these U.S. Treasury investments, those investors still have the option of selling them. But finding someone to purchase them might be difficult.

Many members of Congress also have a variety of investments that aren't based around the U.S. Treasury -- although these investments could still be affected by a default or a downgrade in U.S. credit rating.

Last year, the Wall Street Journal reported that Sen. Johnny Isakson (R-Ga.), as well as some other members of Congress, even had investments that would benefit from a fall in the U.S. stock, bond or real estate markets. At that time, Isakson told the Wall Street Journal that his account was professionally managed and that he had no control over it. Isakson has since parted with these funds, according to the Center's review of his 2010 disclosure reports.

ProShares Ultra Short funds, for example, are designed to profit inversely from the bond index or fund on which they are based.

House Majority Leader Eric Cantor (R-Va.) had an investment of between $1,001 and $15,000 in the ProShares Ultra Short Lehman Bros. 20 year fund, according to the Center's review of his 2010 financial disclosure documents. This investment is designed to gain from a fall in the bond index on which is based.

"Conspiracy theorists," Laena Fallon, a spokeswoman for Cantor, told OpenSecrets Blog, "would have to believe that Eric would want to lose hundreds of thousands of dollars to make a few thousands in return. Putting aside the lunacy of it all, he would lose hundreds of thousands of dollars if he did what they suggest. Any person who would seriously identify themselves with this ridiculous conspiracy theory reveals complete inability to understand diversification and basic investing."

Alan Ziobrowksi, a professor at Georgia State University who researches the financial holdings of U.S. government officials, said the possible effects of a default are difficult to predict and, therefore it is unlikely that someone would vote on any legislative proposal based on how their personal assets might be affected.

The whole situation is "too dicey" Ziobrowski told OpenSecrets Blog for anyone to attempt to take personal advantage of it.

Regarding attempts to vote based on a gain for personal investments, Ziobrowski said, "If you were going to be playing this game, you would do it with something other than Treasury securities."

Don Dutkowsky, an economics professor in the Maxwell School of Citizenship and Public Affairs at Syracuse University, told OpenSecrets Blog that so many anomalous things have happened in the U.S. economy since the financial crisis began in 2008 that there is a high level of uncertainy about what a default might cause.

"I don't think anybody has the desire to see any new, unique situation in terms of Treasury bills and bonds defaulting," he said.

Among Treasury bills, Treasury notes and Treasury bonds, T-bills have the shortest maturity, ranging anywhere from one week to 52 weeks. Treasury notes have a slightly longer maturity, and interest is paid every six months. Bonds take 30 years to mature, but also pay interest every six months.

Say you buy a Treasury note with a two-year maturity at $500. That means you own $500 of U.S. debt. Every six months, you will be paid a set amount of interest on that $500. And when two years has elapsed, you will get $500 back, meaning overtime you have earned more than what you initially paid for the note.

If the debt ceiling is not raised and the government was to run out of money, the government would not be able to pay all of its bills, which could be bad for people invested in the U.S. Treasury's debt.

Depending on how long the crisis lasted, those holding a bill, which has the shortest maturity, have the most immediate risk of not receiving their payments on time. If the crisis is not solved within six months, those holding notes and bonds and expecting interest payments are also at risk.

For anyone who holds a Treasury bond, "the immediate concern is, am I going to get paid?" Dutkowsky, of Syracuse University, told OpenSecrets Blog.

"If the United States defaults and the value of their assets decline, they stand to lose a lot of money," added Esther Redmount, a professor of economics at Colorado College. "The holder of [Treasury investments] would not realize the capital gains they expected when 'investing' unless they could afford to hold them for a long time and the United States re-established its higher credit rating."

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